Widespread ranking and ratings-based performance management is damaging employee engagement, alienating high performers and costing managers valuable time.
A Deloitte 2015 Human Capital Trends survey shows that just 10 per cent of respondents believe that the performance management process within their organisation is a good use of time. In other words, 90 per cent think it’s a waste of time.
The annual process of rating employees performance and ranking them against their colleagues is widely considered to be broken. This process, widely known as “rank and yank,” has been found in many companies to demoralise employees, create animosity and spur good people to look elsewhere for work.
A leading organisation in the IT Industry for instance reported that the process has resulted in “capricious rankings, power struggles among managers and unhealthy competition among colleagues.”
Instead of being used as a management tool for strategy execution, traditional performance management is currently viewed as a HR “tick box” exercise that needs to be completed by employees for compliance purposes.
The process is divorced from the day-to-day management processes and relegated to a biannual event at best as opposed to being at the heart of the tools the leadership uses to get the business done.
Out with the old
Many of today’s employers understand that it is time to reassess their performance management systems. Over 70 per cent of our survey respondents stated that they are either “currently evaluating” or have recently “reviewed and updated” their systems.
In a world where employee retention and workforce capability are significant indicators of business success, the performance management process should focus on continuous coaching and development, rather than competitive evaluation.
The good news is that change is underway and innovative new performance management processes are starting to come to the fore.
Companies leading this transformation are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development and agile goal-setting aligned to the needs of the business.
At present, more than 70 per cent of all employees work in service or knowledge-related jobs. Their performance is driven by their skills, attitude and customer empathy—and by their ability to innovate and drive change by working through teams.
These skills must be built over time, and successful performance management must be focused on constantly developing these capabilities rather than ranking them at a moment in time.
Managers who provide regular feedback and opportunities to improve are far more likely to field high-performing teams than those who retain once-a-year rankings.
The days when managers could lead from a position of command and control are over. In today’s high performing teams, employees must take ownership of their performance and act on their own to improve their capabilities. Managers become coaches rather than evaluators.
Equipping managers with skills on how to coach and develop their direct reports is a key enabler of the new model of performance management.
Also, a new focus on managing to strengths rather than weaknesses is emerging. Research shows that a person’s best performance comes when heshe is given meaningful work that leverages person